New Zealand energy

New Zealand: Oil plans face potential judicial review

Environmental group Greenpeace took court action on November 26th to try to prevent a US oil company, Anadarko, conducting exploration work off the coast of New Zealand.

Analysis

Exploration by Anadarko, which has been searching for oil deposits off the coast of New Zealand's North Island and is to have a 4,600m deep exploratory well, is opposed by environmental groups, which have claimed that it could result in an oil spill similar to that in the Gulf of Mexico's Deepwater Horizon field, which was 25% owned by Anadarko.

At the end of November, a flotilla of yachts were protesting near Anadarko's exploration vessel, the Noble Bob Douglas. However, Greenpeace demonstrators abandoned that protest after it filed papers in the New Zealand High Court, seeking a judicial review of the process by which the Environmental Protection Agency (EPA), the statutory body, gave permission for drilling. Greenpeace claims the EPA failed to look at several key documents, including oil spill modelling reports and emergency plans to deal with an oil spill. Greenpeace is asking for an urgent hearing, and hopes to have the matter resolved within weeks if not days.

The prime minister, John Key, has said he is confident that the EPA's decision will be upheld. But Greenpeace says a successful judicial review could affect other plans for oil exploration in New Zealand waters. Anadarko currently plans to explore for oil off the coast of New Zealand's South Island next year, as part of an NZ$100m (US$80m) project to find "world scale" oil and gas fields. Recent investment reports have suggested NZ$2.2bn (US$1.8bn) could be spent by oil exploration companies in the coming year alone. The industry already generates around NZ$2.5bn a year, with corporate tax and royalties worth some NZ$750m a year from fields much smaller than those that Anadarko hopes to find.

The Green Party opposes Anadarko's plans for oil exploration. However, the main opposition party, Labour, has taken a more nuanced stance. Its deputy leader, David Parker, has said Anadarko's activity is legal, but the process for granting future exploration consents needs to be tightened up.

Impact on the forecast

Despite the latest developments we maintain our view that the government will continue efforts to develop New Zealand's natural resources.